How to plan a Restaurant Business: Things You Should Focus On

Planning a Restaurant Business

While it is true that fortune favours the brave, it also true that thoughtless pursuits have hardly ever led to any victory, much less a business victory. Couldn’t be more true of restaurant business. From afar it may look like a breeze; find a place, set it up, hire kitchen and serving staff, market and fire off. But jumping in like that without planning a restaurant business is likely to cause heartaches and regrets.

Opening a restaurant requires meticulously detailed planning and calculations. You aim to be a restaurateur, fine. But before you take the first step towards that, you need to answer the following question:

Why do I wish to open a restaurant?

Honest and based-on-sound-reason answer to this question would mean you know what you are going to do. That’s good news. Half the job is done! For this self-knowledge reflects your passion and faith and leads you to success.

Now gear up for the nitty-gritty.

Phases

Starting a restaurant business requires threadbare paperwork, what we may call a detailed business plan or roadmap. This roadmap has three phases:

Pre-establishment

This is the phase when you plan things out in maximum detail, coherently, before you set up the business on ground.
Establishment

This is the phase when you actually set up a business.
Post-establishment

This is the phase when your business starts its operations.

This article will focus on 'Pre-establishment'.

Phase 1: Pre-establishment

In this phase you have to work on a host of things which would directly impact the outcome of your efforts. You need to be as much detailed about the following areas as possible so that once the place has been set up you know what to do and how to do.

How much expertise do you have?

While it is not necessary that you have the experience of the field, having some always goes to your advantage. Reason: you would have first hand idea of the ins and outs of the business as well as the issues that you as a restaurateur may face in the short and long run.

But even if you don’t have expertise, you can still become a restaurateur. Only, you will have to put in extra efforts familiarizing yourself with the field and the potential pitfalls. Working in some established restaurant for gaining experience and first hand knowledge would be a good idea.

Finances

This is the most important thing to figure out. You need to have an estimate of how much finance you would need for the following:

Property on lease
Licenses and permits
Insurance
Staff
Restaurant POS
Design and décor
Furniture and fittings
Kitchen
Management (staff, customers, cash)
Sales & marketing
Stock and inventory

The second important thing would be to figure out how much finances do you have. Would you be able to self-fund the entire project, or look for partner(s)? It may just as well be the case that you may not have the finances with you at all. In such a scenario, you will need to figure out ways of finding an investor.

Location

One of the major factors underwriting a restaurant’s success is its location. A well thought out location is bound to direct the sales graph upwards comparatively early.

The following factors need to be weighed in before shortlisting a place for your restaurant.

Competitors
Neighboring businesses
Customers traffic
Population (type and strength)

Restaurant type

You need to be absolutely clear on what type of restaurant you are going to open. Would it be a QSR, café, take-away, or concept restaurant?

Competition

While choosing a location, you will also need to study (and plan for) your competitors. To begin with, you will need to study and strategize for the following:

The number of competitors that you have.
What are the strengths / concentration areas of your competitors, and why so
The menus of your competitors
Which areas are your competitors deficient in / ignoring, and why so
Which items are ‘hot selling’ in the market
Keeping the above in view, how would you set yourself apart from your competitors

Profit potential

The core purpose of a restaurant (like any other business) is to make money and earn profits. So you would need to make cold, conservative calculations about profits too. The most essential part of this potential profit-and-return on investment calculation is sticking to realistic statistics regarding the following: